Hi
When I filled out the Fafsa with my son on Jan 1, my EFC was 4106 and his estimated Pell Grant was $1580. I went in to correct it a few weeks ago with my new figures after I did my taxes and I thought I was done. I received a confirmation email saying my changes were submitted. Then I received an email saying my fafsa was not submitted. So I logged in and went through and linked it to my taxes. My income was actually lower than what I estimated when I first filled the form. Now not only has my EFC went up to 4989, but the Pell Grant fell to $780. What did I do wrong??
Compare the SARs and see what changed. When you do the DRT it tells you which questions will be transferred and what the old and new amounts are. I think you can still view that too.
Could it be that I thought I was going to file 1040A like last year, but since I had mortgage interest and property taxes, I filed 1040 instead? This is the only difference from last years filing other than I actually made less than I did in 2013. Thanks for your responses!
What was your AGI? Yes that could make a difference if your AGI was under $50k. Under $50k and filing a 1040a qualifies you for the simplified formula which doesn’t count student or parent assets.
there is another difference in #94b…I had $2430 in deductible payments to IRA. My AGI last year was 42,596.
when I estimated on Jan 1, I used 2013 taxes and my AGI was 44,221 so it went down when I corrected them after filing this year.
So you had put 0 for 94b and the DRT filled in $2430, is that what you’re saying? That would increase EFC and no longer qualifying for the simplified formula would too. Your assets over the asset allowance would be counted at 5.64% and your student’s assets with no asset allowance at 20%.
Yes that is correct. I thought your 401k wasn’t counted as an asset? The 2430 were my contributions last year.
Last year’s contributions are counted. Now they will be part of your retirement funds and not counted next year, but anything you contribute this year will be counted. It makes a huge difference.
Yes, 401k and IRA balances aren’t counted. But it’s considered optional to contribute to a pre-tax 401k plan or to contribute to an IRA and take the IRA deduction during the college years. So those amounts are added back to AGI.
But not qualifying for the simplified formula means non-retirement assets you have above the asset allowance are counted at 5.64% and student assets are counted at 20%.
You can look at the fafsa formulas at the link below, both the regular and simplified and work through them manually if you care to. Also look at page 4 to see if any of the other simplified formula qualifiers are applicable to you. Table A-5 on page 19 has the parent asset protection allowances.
http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
It isn’t counted as an asset but current year contributions are added back to income for that year’s fafsa, 2014 in this case. This article is titled for IRA but 401l is treated the same.
http://www.forbes.com/sites/troyonink/2013/02/28/ira-contributions-pay-less-in-tax-but-more-for-college/
The 401k and IRA are not counted as asset, but the deductible contribution would be add back to the AGI in FAFSA calculation.
Am I missing something, but if the AGI in 2013 was $44,000 and in 2014 $42,000 plus the retirement contributions of $2,400 wouldn’t the total be $45,000? Still under $50,000? Could it be that the same income has a different EFC from last year to this? Also I think with age the income protection goes down?
Also did you have property taxes and mortgage interest higher than your standard deduction? That is the only reason you would itemize, if you would have a higher deduction by itemizing.
Up until recently we had a similar income, but our standard deduction was always higher than all the mortgage int, medical exp, property taxes, state and local taxes combined.
sometimes even if income<50k, but if you cannot file 1040A, assets come into play and efc goes up.
Note: Since 1999-2000, taxpayers who itemize deductions on Schedule A of Form 1040 are now considered to be required to file a 1040 and hence ineligible for the Simplified Needs Test.
- As others have noted, the retirement contributions are added back in to AGI.
- You are filing 1040, not 1040A, so your assets (not retirement accounts or home equity) are counted, as are your son's.
- You may be paying less tax; since that is a subtraction, paying less will raise your EFC.
- If your earning from work are actually lower, that will also raise your EFC (since they give you a credit for FICA based on "earnings from work").
I strongly urge you to get the book “Paying for College Without Going Broke” (your library may have it) to better understand this whole process. Definitely worth the price if you have to buy it!
3 & 4. Won’t raise your EFC as much as the earnings drop will lower it. But yes, an earnings drop won’t decrease EFC as much as one might think.
But I think the main issue is no longer qualifying for the simplified formula.
OP, I’m curious. It appears the DRT updated the type of return filed. Did fafsa then ask you for asset information because that was skipped the first time you submitted fafsa? Or did you enter asset info the first time you submitted? Some states still require asset info even though the first time you submitted you would have qualified for the simplified formula.
Yes I bought the home in 2013, so when I filed last year I didn’t have enough property tax or mortgage interest to itemize. This year I did and it was slightly higher than the standard deduction.
So seeing I will most likely be itemizing for the next four years, I should just get used to getting no help from fafsa. Should I even bother filling it out in the future. I guess 45k means I am rich according to the formula. I’m a single mom living check to check. 
Do file the FAFSA. Sometimes schools have extra scholarships to get only if you have filed FAFSA; this happened to us last year.